Choice Properties REIT offering will segregate partner debt in a separate trust

Although at common law it may not be possible for a partner to also be a partnership lender (so that such debt effectively is recharacterized as partnership equity), CRA on one occasion considered that this potential recharacterization may be overridden in Ontario under the Limited Partnerships Act (Ontario) (see 17 March 2003 T.I. 2001-009567).

When the prospectus for the Choice Properties REIT offering (discussed in a previous post) was finalized, two preliminary steps were added so that $2 billion of notes owing by the master subsidiary Ontario LP will be held by an intermediate subsidiary unit trust rather than directly by the Loblaw-group limited partners.

Neal Armstrong.  Summary of Choice Properties REIT prospectus under Offerings - REIT and LP Offerings - Domestic REITs.